Special Topics

The Philadelphia Federal Reserve reported that its General Factory Sector
Business Conditions Index improved during March to 12.4 from an unrevised -2.8
in February. It was the first reading above break-even since August and the
highest level since April. The latest reading compared to expectations for -1.1
in the Action Economics Forecast Survey.

The ISM-adjusted General Business Conditions Index constructed by Haver
Analytics increased to 51.7 from 44.7. It also was the highest level since
April and is comparable to the ISM Composite Index. During the last ten years,
there has been a 71% correlation between the adjusted Philadelphia Fed Index and
real GDP growth.

As with the Empire State figures reported Tuesday, each of the component
series improved. Shipments jumped to 22.1, the highest level since November 2014
while new orders similarly rose to 15.7. Delivery times slowed substantially as
the index rose to 0.3, and unfilled orders fell at a substantially reduced rate.
The employment index rose to a lesser degree m/m to -1.1 from -5.0. During the
last ten years, there has been an 81% correlation between the jobs index and the
m/m change in manufacturing payrolls. The rate of inventory decumulation also
slowed modestly. The length of the average workweek also lengthened
significantly.

The future business activity index also recovered sharply to the highest
level since November. New & unfilled orders both increased sharply along
with shipments. Employment improved slightly but hours surged. Expected capital
expenditures also rose to the highest level since November.

The survey panel consists of 150 manufacturing companies in Federal Reserve
District III (consisting of southeastern PA, southern NJ and Delaware.) The
diffusion indexes represent the percentage of respondents indicating an increase
minus the percentage indicating a decrease in activity. The ISM adjusted figure,
calculated by Haver Analytics, is the average of five diffusion indexes, new
orders, production, employment, supplier deliveries and inventories with equal
weights (20% each). Each diffusion index is the sum of the percent responding
"higher" and one-half of the percent responding "same."

The figures from the Philadelphia Federal Reserve can be found in Haver's SURVEYS
database. The Action Economics figure is available in AS1REPNA.